Jennifer is an associate at Tredway, Lumsdaine & Doyle, LLP. Jennifer's emphasis is in estate planning, probate and trust administration and related litigation matters.
jsawday@tldlaw.com
Monica Goel
Monica is an associate at Tredway, Lumsdaine & Doyle, LLP. Monica's emphasis is in estate planning, trust administration, probate, and trust and probate litigation.
« October 2007 | Main | December 2007 »
Our very own Monica Goel, Esq., will be a featured speaker in NBI's upcoming seminar on Estate Planning and Recovery for Elderly Clients this coming December. The seminar will be held at three locations at three dates.
For more information, you can click here to see the brochure from NBI.
Trusts are not protected from litigation. Really, anyone can sue anyone for anything (just about). Sometimes you need an attorney to defend you from a lawsuit that should not have been filed. What does this mean about Living Trusts? And where am I going with this post?
Our firm handles many trust litigation matters. We often represent the trustee of a trust that has been sued by a disgruntled heir.
People seem to think that the terms of the trust is what has caused the lawsuit. For example, the inclusion of a certain probate code language or some other boilerplate language some how makes it more prone to an attack.
Sadly, this is not the case. People attack Living Trusts because they have either been omitted or feel slighted in how you want to handle the final disposition of your assets. Think they should have gotten more.
You have more control than you think over whether a lawsuit happens after you die if you create a Living Trust to dispose of your assets.
Some things you could do to make your Living Trust more susceptible to a lawsuit (these are things not to do or if you are going to do -- think carefully and discuss with your attorney at length):
1. Disinherit a child outright
2. Draft your Living Trust shortly before you die
3. Draft your Living Trust at the insistence of a family member who gets more than the others
4. Favor one child over another
5. Name your children to act as co-trustees and if they don't agree... they go to court
6. Execute your Living Trust while incapacitated
7. Favoring a new spouse over your children from a former relationship
8. Not giving anything to your children, but all to a charitable organization or church
9. Omitting your spouse when you are not separated or divorcing (there are state specific laws on drafting estate planning documents while divorcing)
10. Giving it all to your dog instead
I think you get the idea. It's generally not the terms of the Living Trust that causes lawsuits -- it is the parts that are drafted in accordance to your wishes that are more subject to an attack than anything.
This doesn't mean don't draft a Living Trust. Rather it means consult with your attorney, cover your bases and protect yourself. Your attorney may have good ideas of preserving your wishes and protecting your estate from an attack after you die.
One common mistake that people make when they have a spouse or children is to transfer their retirement accounts into their Living Trust. If your attorney suggests that you do this and you have a spouse or children who could survive you -- ask why they are recommending this.
It could be that your attorney is not experienced in estate planning and does not know what should or should not be titled into your Living Trust.
Generally, retirement accounts are not subject to probate because you can name beneficiaries. And by naming your spouse or children as beneficiaries, you are allowing them the most flexibility in dealing with transferring your retirement accounts when you die including the option to rollover the retirement account.
Otherwise naming your Living Trust as a beneficiary may have dire tax consequences to your beneficiaries if it remains held in your Living Trust when you die. Talk to your CPA or financial advisor for more details.
